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While it can be confusing, the key to this alphabet soup is that all of these B, H, N and red chip Chinese stocks are available in some form to foreign investors — either through a fund or directly. The previously mentioned FXI holds hold H-shares and red chips, while the PowerShares Golden Dragon China (PGJ) holds only N-shares.

Gaining Access To A-Shares

Which brings us to the crux of this article: those elusive A-shares.

China’s A-share can be thought of as the “real” Chinese stock market. These are firms which are incorporated on the mainland, listed on the Shanghai and Shenzhen exchanges and are denominated in local currency (the renminbi). And for most of us, they are strictly verboten to buy and trade. Restrictions prevent only certain institutional investors who have been granted a special status — called qualified foreign institutional investors (QFII) — to dabble in the A-share market. And Beijing doesn’t hand these out willy-nilly.

However, the game has been changed with ASHR’s launch.

Fund sponsor Deutsche Bank AG (DB) –- through an investment in China’s Harvest Fund Management — has been granted QFII status. Using that power, DB has created an ETF that tracks the 300 largest and most liquid stocks in the China A-share market … directly.

Previously, A-share tracking funds — like the Market Vectors China ETF (PEK) –- had to use swaps and derivatives to accomplish their goals. The use of swaps adds another entire layer of counterparty risk to the equation and investors have been cautious to buy in.

Yet, with ASHR holding actual shares of mainland Chinese firms, investors are now given unprecedented access to the bulk of Asia’s largest market. Aside from the access and diversification benefits — sector weightings in the A-share market are completely different than funds like the iShares MSCI China (MCHI) — China’s A-shares exhibit low correlation to other Chinese share classes and international markets. So there is certainly reasons to add A-shares, if you’re a China bull.

As for ASHR itself, the fund is off to an impressive start. While it is expensive — costing 1.08% or $108 per $10,000 invested — the expense could be worth it as it provides the only way to play China’s elusive stocks. For portfolios, all-inclusive access to one of the most dynamic emerging markets is now at hand.

As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities. But he does plan on adding ASHR within the next month.